Banks are reporting record profit levels - with HSBC alone making £11.9bn. But how much are they making out of us?

The big banks are defending the amount of money they've been making this year - as between them they've announced annual earnings of more than £33bn.

But banks are unusual businesses in that not only do they have their own money - and lots of it - they also have our money, tucked away in our accounts and savings.

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So how much are customers individually chipping into the cash mountains of the big banks?

HSBC, which on Monday announced record UK banking profits of £11.9bn, says that it makes a profit of £1.05 per week from each of its personal customers in this country.

It doesn't take long with the pocket calculator to see that making less than £55 a year on bank accounts doesn't easily translate into mega-profits of £11.9bn.

Global cash machines

That's because banks are vast, sprawling global industries - and HSBC says that 80% of its business is outside the UK.

UK banks handle a third of the world's currency exchange

And even though we're acutely aware of the charges and costs of banking - this is only one aspect of a more complex operation, along with commercial and corporate banking and investments.

The UK is a major international financial hub, handling a third of the world's foreign exchange business. And even though we see the High Street bank in terms of lodging our pay cheques - the banks are keeping their eye on the big investors, such as pension funds, which can have billions in their pockets.

Current accounts are always going to make some cash for banks - if they're overdrawn they take interest, if they're in credit they make interest by re-investing - but in the bigger financial picture, these are not the ways that banks make much of their money.

Nonetheless, Eddy Weatherill of the Independent Banking Advisory Service says that current accounts work as recruiting grounds for more lucrative products - such as mortgages, pensions, credit cards and insurance.

Windfall tax

And this isn't small change, as gross mortgage lending at the beginning of this year was running at over £14bn.

Banks say they already give big sums in tax

Mr Weatherill wants banks to pay a windfall tax, arguing that banks have made excessive profits from excessive charges.

Inflated interest rates, charges, fees and penalties have all been applied to business and personal customers, says Mr Weatherill.

And he says that bank customers are, on average, being overcharged by £400 per year.

The profits generated by banking groups have allowed them to promote a network of financial services - and he says that many customers do not realise they might be buying their insurance, using a payment system or getting a loan, all through the same banking organisations.

£9bn taxes

But the industry organisation, the British Banking Association, rejects such claims - and says that banks are already paying plenty of tax, about £9bn last year. That's about £150 per capita of the population.

BBA spokesman, Brian Capon, says banking profits are not out of step with the size of the organisations - and that profit increases reflect increased efficiencies within the banking industry.

And he says that consumers can misunderstand the profit reports - seeing them as being related to their own current accounts, rather than the huge global business operations in the background.

He also says that, unlike most countries, customers in the UK can have free banking for their current accounts - as long as they stay in credit. And if people want to avoid charges, it is in their own power to do so.

Add your comments on this story, using the form below.

Well I live in Sweden and the banks here charge for everything - to have an account, to use internet banking and to have a credit card. When I lived in Australia they charged for acconut usage too. So I think UK customers have it ok!Tony, Stockholm

I feel very bitter and angry with HSBC, announcing their huge profits this week. The fees and charges they applied to my account after I lost my job last year were truly shocking. I went £50 over my overdraft limit and was charged £242 for it. When I complained, I was sent a stock letter which palmed me off, claiming that the bank needed to recoup the costs I caused them.Caroline Spurry, Knutsford, Cheshire

I worked for HSBC for six years and was constantly amazed at people's complaining over personal banking charges. Unlike in many countries personal banking in the UK is free, for the most part, with charges only being levied if an account is not operated correctly. I still remember the amazement on the faces of an Australian couple I once opened an account for when I told them there were no monthly charges for their account.Philip Stratford, Wirral

I don't think a bank has any need to justify the mega profits they make. As a consumer we choose to save, invest and borrow from such providers with our own free will. Like any other enterprise, banks are in business to make a profit.Jay, New Cross Gate, London

I must have made my bank a small fortune. I get charged £35 for going over my limit, even if it is a case of going 1p over. They charge too much, you get in a cycle of going over to survive - they've charged me so much in consecutive weeks that when I got paid I was still over. How can they sleep at night?Jim, Reading

The UK is behind in so many industries nowadays - let us not drive the one thing we're really good at away by having higher taxes for that sector.Peter Smith, UK

Why charge so much for less of a sevice than 15-20 years ago with better technology and less staff? For example, for £20 you were informed by letter what debit had not been paid - now with modern technology you are charged £38, even for a £2 debt,with no information. The computer has had a bigger pay rise than me over the same period of time.
John Hayter, Southampton

Banks are good value for personal accounts. If you stay in credit and don't take a loan, you basically get free banking, free credit cards, free cheques, free online bankingżif you take a loan or a mortgage then you pay, this is only fair. Colin, London

I personally think British banks are value for money and they've earned their profits. Try banking in the rest of the EU - charges for everything, including current accounts and credit cards, miserable interest rates, and mediocre service.John

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